Exit polls and early results have shown Labour is on course for a much smaller third term Commons majority.

A MORI/NOP survey for the BBC and ITV, based on how the public say they have voted, found that Tony Blair is set for a drastically reduced majority of 66 seats.

The Conservatives were tipped to gain 44 seats, taking their tally of MPs to 209. The prime minister's ranks would be reduced to 356 while Charles Kennedy's total would fall two to 53.

But early results suggested the exit poll had underestimated the swing against Labour, with Putney in London and Medway in the South East falling to the Conservatives

Following his election, chancellor Gordon Brown said "we will listen and we will learn".

And former home secretary David Blunkett said it looked like being a "substantially reduced majority" as "normal politics resumed".

Left wing Labour MP Bob Marshall-Andrews conceded defeat in Medway and said: "It is hard to say the war and the prime minister have not caused a serious haemorrhage in Labour votes."

Exit poll

According to the exit poll, Labour was set to receive 37 per cent of the vote, the Conservatives 33 per cent and the Lib Dems on 22 points, an increased share of support.

Pundits, however, warned that exit polls have been incorrect in the past and were waiting for real results to emerge before they begin making final conclusions about the poll.

The first declared results in Sunderland suggested that Labour was underperforming the exit poll prediction, with a four to five per cent swing against Labour.

In Putney the wing was six per cent, while the Lib Dems secured a seven per cent swing against Labour in Houghton and Washington East.

Deputy Labour leader John Prescott said it was "difficult" to tell how well his party had done, but added it was "clear" it would be back in office.

"There is going to be a Labour government, there is no doubt about that," he told the BBC.

"I'm a little suspicious that it is as low as you are suggesting," he said of the projected majority.

Prescott added that a majority of 66 was higher than many previous governments had won in the past.

Blair knocked back

The results suggest a disappointing conclusion to the election campaign for the prime minister.

A significant cut in the number of his MPs will leave question marks over the government's ability to push through the radical reforms it has promised in its manifesto.

Former Cabinet minister Clare Short said a reduced parliamentary party might be "good" for Labour.

"Labour could live very happily with a majority of 66 if that is the outcome," she told Sky News.

"If there was a little bit more discussion, and respect for parliament and all the different opinions in the Labour Party it might improve the quality of the government.

"So, a reduction in the majority - but still a reasonable majority - that might be good for our government."

"I think everyone agrees, we would have done better with a different leader," she added.

Howard happy

For Michael Howard, the outcome looks like vindication of his electoral strategy and his party within striking distance of an election victory next time round.

Conservative co-chairman Liam Fox said exit polls were not typically a fair prediction of the result and he would reserve judgement until actual results come in.

"We think that we fought a very energetic, very disciplined campaign, the most disciplined we have fought for a long time," he said.

"There will be no uniform national swing, there will be no regional swing. I think we will be here well into the night before we get a clear picture emerging."

Lib Dem disappointment

Charles Kennedy's troops would be disappointed by the result, if the exit poll proves accurate.

Their hopes of replacing the Conservatives and being the "real alternative" to Labour would come to an abrupt halt in the event of the exit poll being replicated at counts around the country.

In Torbay they lost votes to the Conservatives but held the seat.

Liberal Democrat deputy leader Sir Menzies Campbell also said as recently as 1992 exit polls had been widely wrong.

"I think there is going to be a great deal of regional variation," he said.